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Technology Shocks and Job Flows

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  • Claudio Michelacci
  • David Lopez-Salido

Abstract

We decompose the low-frequency movements in labour productivity into an investment-neutral and investment-specific technology component. We show that neutral technology shocks cause an increase in job creation and job destruction and lead to a reduction in aggregate employment. Investment-specific technology shocks reduce job destruction, have mild effects on job creation and are expansionary. We construct a general equilibrium search model with neutral and investment-specific technological progress. We show that the model can replicate these findings if neutral technological progress is mainly embodied into new jobs, while investment-specific technological progress benefits (almost) equally old and new jobs. Thus neutral technological advances prompt waves of Schumpeterian creative destruction, while the adoption of investment-specific technologies operates mainly as in the standard neoclassical growth model.

Suggested Citation

  • Claudio Michelacci & David Lopez-Salido, 2004. "Technology Shocks and Job Flows," Working Papers wp2004_0405, CEMFI.
    • Handle: RePEc:cmf:wpaper:wp2004_0405
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    References listed on IDEAS

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    1. Philippe Askenazy & Eva Moreno Galbis, 2007. "The Impact of Technological and Organizational Changes on Labor Flows. Evidence on French Establishments," LABOUR, CEIS, vol. 21(2), pages 265-301, June.

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